would you like to know what accounts contractors would use in their chart of accounts well let us
show you in this episode of QuickBooks Online for contractors if you have any questions about
this topic you can leave them in the comment section below and I'll do my best to help you
and of course if you feel the video helped you I hope you will click like and don't forget to
subscribe to get updates on new videos that come out all the time now you may well ask what is the
chart of accounts well it's the general ledger of the company it's a set of records where each
record is a category of transactions each record is called an account you need a separate record
or account for each income type of transaction and you need a separate account for each expense type
of transaction and you need a separate account for each bank account type of transaction and
credit card type of transaction that you have in your company each transaction type gets recorded
in two accounts that match the category of that transaction in the days before the computer the
general ledger was a notebook you can see on the left it was like a book where each page in the
book was an account that represented something you had to account for nowadays and quickbooks
online we call that set of records the chart of accounts and it's the same idea except it's in
the computer quickbooks online gives you a sample chart of accounts to work with from the beginning
the accounts that quickbooks online gave you when you signed up are what most companies need
expense type of accounts have names of expenses that most companies would have as they operate
so they're trying to save you a little time and help you out you must add the ones that
you need for your specific company and that's what we're going to do now so you may well ask
what information is needed when you add accounts to your chart of accounts well you have to tell
QuickBooks the names of the accounts that your specific company means in order to add it to the
list and whatever name you put and exactly how you put it is the way those accounts will show
up on the reports like the profit and loss and the balance sheet you also have to put in account type
an account type will determine how the account will behave or more specifically what you can
do with that account now QuickBooks Online adds this extra piece of data that you also have to
tell QuickBooks when you put in another account in the chart of account it's called detail type
and it's usually not relevant it's just used to clarify exactly how you're going to use
that particular account now account type can be explained this way account type is explaining
to QuickBooks how the account will behave or what you can do with that account for example
only bank type of accounts will be available in the write checks window because you would
only record checks from a bank type of account not an income type of account or any other type
of account only credit card type of accounts will be available to choose when recording credit card
payments and credits in the credit card window only income type of accounts will show up at
the top section of the profit and loss to show your total income and of course expense type of
accounts will show up at the bottom of your profit and loss to show what you spent and
so on so hopefully that's enough to get started just to get the idea of what account type is now
here we are in QuickBooks Online and to open the chart of accounts you click accounting chart of
accounts and if it's the very first time that you're going to the chart of accounts in this
account you'll see this little picture here and you have to click see your chart of accounts now
here are all the accounts that QuickBooks Online has already put on your account list in order for
you to manage your company and if you scroll down you see where it starts by expenses most
of these expense names are very common expenses that typical companies would have if you scroll
up you see it only gave you one generic sales income account that we're going to manage and
of course it gives you some other things that other companies usually do use when they manage
their company now here are the actual accounts that we're going to add that we will need to use
in our company so we will leave on the list most of the accounts that QuickBooks put and just add
the ones that we need and when we add them we'll put the name in capital letters so that it will
be clear that that is an account that we added not an account that automatically came with QuickBooks
Online so the first one is named cash and bank and it's a bank checking type of account so how
would you add a new account well scroll to the top of the chart of accounts window and click new and
you get the add account window the first one the type is Bank and the detail type is checking after
you choose the type and detail type then put the name cash in bank actually capital letters
now notice if you click save and close here it is added to the account list in the chart of
accounts and you could make it inactive which means remove it or you can edit it if you click
Edit you can go back there and change the type or the name or anything that QuickBooks allows
you to change let's add income from plumbing work as an income service income account so scroll to
the top new it's an income type of account its service income and we will call it income from
plumbing I think income from plumbing services let me see what a yes income from plumbing work
actually excuse me income from plumbing work you know the name can be anything the owner wants
it to be as long as when she or he looks at it on the report they know what it is and we don't have
to click Save and close we can click the pull down arrow and click save and new and it will
save us time when we add the next one income from electrical work so again this is income and this
is service income and the name is income from electrical work and click Save and new when it
comes to the to expenses that we're going to add just put other expense in the detail type because
it's really not relevant in our case so we're going to choose expense and come down to about
the middle where it says other business expenses and then we'll put job supplies expense save and
new and again for the last one delivery expense will be other business expense so we scroll down
expense other business expenses and this will come up here as delivery expense okay on the
last one you can click Save and close and now we've added the accounts that we need and the
rest of the accounts that we need should already be here but you should know you can reopen and
edit any account if you made a mistake and as I showed you if I made a mistake on for example
cash and bank I would come to this list and click the pull down and choose edit that would bring me
back to the window where I could change type detail type or the name and lastly you should
know that you can remove accounts that you don't need by clicking to make them inactive and you
would click in the same place so for example if we don't need inventory asset which in our case
we don't we could come to the right click this and click make inactive and we click are you
sure you want to inactivate this click yes now it's gone from the list and we don't have to
deal with it at all so that's how you put in the chart of accounts and that's what accounts are
you